I Missed Something During the Crisis
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Paul Krugman just won the Nobel for economics. He took a job as a commentator at the New York Times some time ago. When he took the job, he was concerned that it might ruin his changes at winning the Nobel. Two things happened: he became an outspoken critic of the current administration and he won the Nobel (Raines, 70).
Most recently, Krugman took on U. S. Treasury Secretary Hank Paulson. Paulson wanted to bail out the banks by buying their bad debt. Krugman said not to buy debt, but to buy the bank's stock to give them added liquidity, the action Paulson ultimately received permission from Congress to do.
An interesting factoid: Paulson changed his mind. Early on, he wanted to buy stocks in failing banks. Then, he changed his mind. Now, he wanted to buy debt. Finally, with Krugman's input, and a whole lot of other folks, he went back to buying stock.
Personally, I got all this wrong. On the Monday when the first vote occurred, I was incensed that some of our local legislators voted against the initial Paulson request. Of course, we all lost a lot of money that day in the market, but that doesn't mean I was any less wrong. When they finally voted to invest in the markets with the $700 billion bailout, the money went to buy stock, not bad debts.
Luckily, Krugman got his way. Yep, we all lost some money. Luckily, the delay took us down the right path.
Strategy works the same way, sometimes. Taking your time to make important decisions does make sense. Asking advice - and actually listening to it - also makes sense.
I'm glad the Congress took the time to pause and re-consider. It worked out better that way.
Reference
Raines, Howell. Don't Believe the Hype. The press bought into the $700 billion bailout, hailing it as a necessity. Why so many got it wrong-and how Paul Krugman got it right. Portfolio. December 2008/January 2009. 69. http://www.portfolio.com/views/columns/media/2008/11/19/Paul-Krugmans-Bailout-Dissent